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What Is PPO Insurance (Explained: All You Need To Know)

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Let me explain to you what is a PPO health plan and how it works!

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What Is PPO Insurance

PPO, stands for “Preferred Provider Organization”, is a type of health insurance plan giving you the flexibility to choose the doctor or hospital you want to work with.

PPOs feature a network of health care providers to provide you with healthcare services.

The way it works is that the PPO health plan contracts with various medical and health care providers to create a network of service providers.

Typically, the service providers will agree to lower their rate to join the network.

As a result, by working with the medical providers in the network, you tend to pay less than if you work with providers outside of the network.

According to the Kaiser Family Foundation’s Employer Health Benefits Survey of 2018, PPOs are found to be more popular than HMOs (Health Maintenance Organization) where 49% of workers were under PPO and 16% under HMO.

PPO Insurance Features

Let’s look at some of the main features of PPO plans in more detail so you can better understand how it works.

Plan Network

One of the main features of PPO health plans is that they have a network of medical providers that you can work with.

By working with network members, you are able to lower your health care costs as these providers have agreed to lower their rates and give discounts to become a member of the network.

Not only you can save money but health insurers can save money as well.

Although the network can differ from insurer to insurer or plan to plan, you generally have a larger network of providers when you’re covered under a PPO.

Choice of Medical Providers

Another distinctive feature of a PPO medical plan is that you may be able to work with providers outside the network and still get coverage.

Although you may have to pay higher rates by working with out-of-network care providers, you will still have coverage nonetheless.

On the other hand, HMOs typically do not cover services provided by providers outside of the network.

Primary Care Physician

Most PPOs do not require you to have a Primary Care Physician (PCP) to get a referral to see a specialist.

In other words, you can see a specialist without having to get a referral having the assurance that it will be covered under your plan.

On the other hand, most HMOs require that you get a referral from a PCP to see a specialist for the specialist fees to be covered.

Plan Costs

From a cost perspective, PPOs tend to cost more than if you were to have an HMO plan.

Since you are getting better rates, you have more coverage, and you have the flexibility to see the provider of your choice, those benefits translate into higher monthly premiums when compared to HMOs.

You may also have deductibles to pay for your coverage.

How Does PPO Medical Plan Work

Being a member of a PPO medical plan allows you to visit any in-network provider of your choice while having the assurance that their fees will be covered by the plan.

What’s more, you have the ability to choose to work with any specialist within the network without having to get a referral from a primary care physician.

PPOs are flexible allowing you to work with an out-of-network provider as well but you’ll need to verify to make sure that the provider accepts your health plan.

To be covered by a PPO plan, you will probably have an annual deductible to pay.

In some cases, you may also have a co-payment for certain types of services or you may be asked to assume a certain percentage of your medical bills.

Although PPOs tend to be more expensive than HMOs, the main reason why many prefer a PPO plan is that they have the freedom to choose their own provider within or outside the PPO network and don’t need to get a referral before seeing a specialist.

What Is A PPO Insurance Plan vs HMO

The main differences between a PPO plan and an HMO are the size of their network, your ability to see a specialist, how much it costs, and the out-of-network coverage you may get.

PPO plans have the following key characteristics:

  • You have more flexibility in choosing a doctor or a hospital
  • You have a network of professionals to select from
  • You have fewer hurdles and restrictions when dealing with a non-network provider
  • Your plan will pay for services rendered by non-network providers 
  • You get better rates when choosing network providers 

HMO stands for “Health Maintenance Organization” and have the following characteristics:

  • You have a network of service providers to choose from 
  • You are covered for services by providers within the network
  • You may have to choose a primary care physician (PCP) who determines the nature of treatment you may need
  • You may need to get a PCP referral for the work of a specialist to be covered 
  • You are not covered for services you get outside of the network
  • You have lower premiums to pay 

In essence, if you want to get more choice of medical care providers and more flexibility, PPOs are the better plans.

If you want to pay less and save money, HMOs are a better option.

Frequently Asked Questions

Let’s look at the most common questions related to what is PPO insurance so we can better understand the concept.

What Is A PPO Medical Plan

A Preferred Provider Organization is essentially a health plan offering you a network of participating medical care providers such as doctors and hospitals for you to get medical care.

What Is A PPO Network

A PPO network is a group of health care providers that have entered into a contract with an insurance company to offer their services at preferred rates.

Typically, network providers include:

  • General physicians
  • Specialists
  • Clinics
  • Hospitals
  • Pharmacies 
  • Doctors 
  • Medical labs services 
  • Medical equipment providers

Is A PPO Right For You

PPO may be the right choice of a medical plan if you are looking for:

  • More choices of providers to choose from within their network
  • Ability to get care from a provider outside of the network if you don’t mind paying more
  • You want to see a specialist without having to get a referral from a PCP

What Does PPO Cover

Every PPO plan may cover different things.

As a result, it’s important that you consider the specifics of the plan to know what’s covered.

However, if a plan is offered on any Affordable Care Act marketplace, then you’ll get preventive care coverage, emergency services, and maternity care.

What Is PPO Takeaways 

So there you have it folks!

What is a PPO insurance in simple terms?

How does a PPO plan differ from an HMO plan?

A PPO plan refers to a Preferred Provider Organization plan consisting of a popular type of health plan available in the individual and family market.

An important feature of PPO is that you have a large network of doctors, physicians, and health care providers to work with giving you lower rates and whose fees are covered by your plan.

When you work with an in-network physician or specialist, you will not need a primary care physician referral for the physician or specialist’s fees to be covered.

If you want to have more flexibility and freedom to choose who you get care from and don’t mind paying more for the services, then PPO plans may be right for you.

I hope I was able to answer your question about what is PPO plan, the features of a PPO health insurance plan, and how it works.

Let’s look at a summary of our findings.

What Is PPO Insurance Summary

  • PPO stands for Preferred Provider Organization 
  • A PPO plan offers a network of health care providers (doctors, specialists, clinics, pharmacies, hospitals) that you can choose to work with and who have agreed to lower their rates to access the network
  • You have the freedom to get care from any provider within or outside of your network
  • With PPO plans, in general, you can see a specialist without having to get a primary care physician referral beforehand
  • You will have higher monthly premiums and may have copays for your office visits 
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